ERP vs CRM: Different Approaches to Meet Your Business Needs

Michael Scheiner
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Both CRMs and ERPs are very important management systems. They serve different purposes, but they also can have overlapping functionalities. 

When it comes to the question, CRM vs. ERP, and what is the difference between them, there is a simple answer, yet with many nuances. 

Simply put: A CRM deals with the lifecycle of the customer experience. Its aim is to increase profitability. An ERP deals with the entire business process. That means production, distribution, HR, budgets, and more. Its goal is to boost efficiency. In other words, ERP handles the back office. CRM is the front office, the part which faces the customers. 

If you’re shopping around for the best CRM and ERP vendors, read on and learn about the different features and benefits of each.

 

 

What is ERP and CRM?

An ERP system refers to enterprise resource planning, while a CRM system is customer relationship management. CRMs mainly deal with marketing, sales, and customer support. ERPs manage the back-end of the operation. CRMs aim to get more customers and boost sales. ERPs aim to make operations more efficient.

 

Which is better CRM or ERP?

For smaller companies just getting started, CRMs are better. They will help grow your customer base and spread brand awareness. CRM software is also cheaper than ERPs and easier to set up. When it comes to bigger, more established companies, ERPs are better, especially to manage complex supply chains.

 

What is the difference between ERP and CRM systems?

The difference between CRM and ERP is that CRM software deals with customers and front-facing aspects of a business. ERP systems help manage more of the business process from supply chains, production, and personnel. ERP software is mainly to streamline productivity, while CRMs are more for boosting revenues.

 

ERP vs. CRM system comparison

Comparing CRM software with ERP solutions is pretty straightforward, although there can be some overlapping in their functionality. 

One of the big differences in core functionality is this: CRM tools mostly deal with customers and front-office matters. The point of CRM is to increase profits. ERP tools mainly deal with everything going on in a company’s back office, including factories and fulfillment centers. 

Both are necessary software solutions for almost anything bigger than a small business. However, startups and small teams could benefit from a light CRM from the get-go. For large businesses and enterprises, an ERP is key.

 

What are CRM features

Contact Management

CRMs give you a 360-degree view of all your contacts. This is important for the customer experience. It shows you the full history of all customer interactions and purchases. It also saves any issues or complaints. CRMs make it easy for sales or support reps to share customer information. It also does real-time updates on customer profiles. For example, when they change their social media information. You can also get notifications based on user activity.

Marketing campaigns

CRM software is important for streamlining marketing strategies. It can help plan posts and show you the best times to publish. It can manage marketing campaigns across several platforms like social media. Many CRMs do email marketing campaigns too. These campaigns segment target audiences based on customer data. It finds potential customers by creating leads from users who engage with content.

Sales pipelines

CRMs are good for managing the sales process. As part of sales force automation, leads from marketing get automatically put into the sales funnel. The pipeline helps stay on top of leads as they move to conversion. Sales reps get tips on when and how to keep engaging. It shows reps where people drop out or experience pain points. This helps plan better for future campaigns and pricings. It’s key for boosting profitability and revenue forecasting.

Helpdesk support

CRMs have many tools for customer service and support. It is a multichannel communication dashboard for customers to reach out. It unifies a call center, emails, messages, and live chats. Support CRMs create tickets and let you track them. It helps reps by giving them customer data. CRMs for support have tools to set up self-service helpdesks, like knowledge bases and FAQs.

Workflows and automation

The best CRM systems use machine learning. This means you can teach the platform to automate simple and repetitive tasks. It includes data entry and data cleaning. It can send out automated replies and reminders via text or email. Workflows can be set up for ecommerce to do quotes and invoicing tasks too. For support, it can help complaint triage and route customers to the best agent.

Analytics and reporting

CRMs for marketing, sales, and support gather a lot of useful data. For marketing, it shows which ads get the most attention. Or, it shows data on times, locations, or devices. There is data on the sales pipeline. You also get data on customer service ticketing. Analytics show the performance of individual reps or teams. Reports can be created and updated in real-time.

 

What are ERP features

Supply chain management

Lots of companies can benefit from an ERP system. It covers a wider range of total business needs. Manufacturing is one industry that can’t be without ERP. ERPs can help with material procurement. It does inventory management and helps organize warehouses. ERPs can show you when space is running out or when certain items are in need of restocking. There are also database tools to keep track of suppliers and other third-party partners.

Order tracking

ERPs maintain visibility over a lot of moving parts. For example, when CRMs help get sales, ERPs come into play to make sure the sale order goes through. It can ensure items are available. It will track the fulfillment of an order from the warehouse to shipping. ERPs can help both companies and customers track delivery schedules. 

Business intelligence

Both CRMs and ERPs are data-making machines. Data in ERP data can cover whole supply chain management. ERP dashboards using real-time data can alert teams to problems like bottlenecks as they happen. More importantly, ERP data analysis can help diverse departments be aware of what each other are doing. This means if a problem occurs in one department, another department can be prepared. 

Bookkeeping

ERPs are useful for managing the financial aspects of a business. Most importantly are employee payrolls. Other important ERP tools for accounting keep track of payables and receivables. ERPs can also help to stay on top of purchase orders, budgets, and other cash flow analysis. This can be useful for companies looking to invest in R&D or other forms of expansion.

Human resources

While CRMs are good for managing contact details, ERPs go further. ERP software is a key tool for human resource departments. It can keep you organized for things like hiring and onboarding new staff. It has tools for insurance and liabilities. This is especially good for large companies with many employees spread out over various locations.

 

ERP and CRM integration: How do ERP and CRM work together?

Combining CRM and ERP allows a company to integrate more data. Sales volumes reported in CRMs can help with production planning in ERP. Customer support issues with products can help improve future iterations. ERPs can alert CRMs about shortages or shipping problems, which can be used to notify customers.

 

CRM vs. ERP software: The final takeaway

CRMs and ERPs offer different approaches to business management. 

CRM is the main tool for sales reps. CRMs are there to get more leads, boost sales, and develop better customer relationships. CRM is a good standalone tool for startups and small businesses. These days CRMs are used equally by marketing agents and customer support reps too.

ERPs take care of everything going on behind the scenes: stuff the customer does not see. It manages the supply chain and inventories. It helps plan production or R&D for new products. ERPs oversee fulfillment, shipping, and deliveries. It keeps up with maintenance and other overhead. It is also a main tool used by HR.

So the big question is, do you need a CRM vs. ERP? Well, if you’re a large business with many employees in several locations, you might need an ERP. The same thing goes if you are in manufacturing or have a lot of fixed capital. ERP is the way to go.

Small companies, independent startups, and solo entrepreneurs should probably start with a CRM. Also, if you are an operation that deals with personalized services, like private instructors or consultants, CRMs are more useful off the bat.

Of course, it is true that many ERPs contain basic customer management tools, and you’ll even find some CRMs, including features to help with accounting or inventories. In conclusion, if boosting sales is your current aim, get a CRM. If cutting costs and streamlining operations is your main goal, ERP is the way to go. 

In the end, as your business grows, you’ll likely want both, or maybe you’ll find the perfect unified ERP and CRM solution.

 

FAQs

Is CRM part of ERP?

CRM and ERP are two different platforms. It is possible for some ERPs to have CRM features. CRMs are normally smaller platforms. They deal mostly with marketing, sales, and support. ERPs have tools for much more of the entire business process. Some ERPs have customer relationship management tools.

Is SAP a CRM or ERP?

SAP is a total business solutions software company. They make many products, including both CRM and ERP software. They also have apps for HR and supply chain management. Many other big software companies have tools for both CRM and ERP. These include Microsoft Dynamics 365, Oracle, and Salesforce.

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